In early 2014, Diamond Foods Inc. paid $5 million to settle its accounting fraud. The company’s CFO manipulated the cost of walnuts by pushing some of the cost to a later period. This practice led to higher income and misled investors in 2010 and 2011. Diamond restated its 2012 financial statements.
In reviewing the SEC filing of Diamond Foods, Inc., I found that its auditors at first issued an unqualified opinion on its 2012 financial statements. “In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Diamond Foods, Inc. and subsidiaries as of July 31, 2012 and 2011 …”
However, due to the discovery of the ...view middle of the document...

As a public company, the auditors of this company should know that the users are the general public “foreseeable users” that invested in Diamond Foods, Inc. because it relied on the audit report on the financial statements where the income was falsely overstated. Thus it may be legally liable to investors of the company. In certain cases, the firm may be liable to vendors of the company who sustained substantial loss due to its reliance on the profitable position reported by the audited financial statements. However, the firm may find relief under Ultramares doctrine. The auditors may also seek relief using non-negligent performance, however, it may be hard in this case.
First of all, the auditors already know there is “possibility of collusion or improper management override of controls”, during its planning, it should have increased business risk for this audit, and increase its normal procedures.
Second, period cut off should one of its primary procedures in order to ensure the transactions are recorded in the right period. The audit firm might not have obtained sufficient and appropriate audit evidence to support its opinion. The fact that a thorough examination of the company’s walnut invoices revealed the scandal may indicate that the audit firm’s audit procedure was not sufficient. Being a long-term auditor of the company, the auditors should maintain its professional skepticism, by maintaining a questioning mind but still examine/verify enough evidence to support its opinions. When an audit firm, sometimes even the same personnel, may have been doing the audits for the same company for a long time. It’s easy to just trust and without verifying evidence or enough evidence. It’s true that judgment is involved in making those decisions, however, an auditor’s professional standards should be upheld at all times and unless the auditors are reasonably assured, it should not tell the public that.
When it comes to the responsibility of management and the audit...

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the regulatory field during the post NEP era, in addition with the implementation of auditors’ ROC reporting duties, yet there are the response was still below under expectation. It was said that emphasizes in transparency of the conduct did not fit the day Malaysia’s environment.
In 1988, the audit firm Hanafiah, Raslan and Mohamad (HRM) appeared to be the only “local accounting firm” to audit the public enterprises and other government entities

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division of accounting most affected by this scandal was the role and function of the external auditors. Auditors by trade serve in the public and stockholders interest. Furthermore, the independence of auditors is essential in performing their duties properly. As a result, which practices are needed to achieve total independence? Moreover, how do we weigh the cost of financial misstatements with the cost of redundancy due to rotation of audit firms

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The Major Regulatory Bodies and their Functions
There are nine major regulatory bodies. The first is Internal Revenue Service, or, (IRS).The function of the IRS is to administer and enforce the internal revenue laws. The second is Securities and Exchange Commission or (SEC). The function of Securities and Exchange Commission is to regulate the securities markets. The SEC requires public companies to obey the generally accepted accounting

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to the GAAP and regulate the securities markets. The next major regulatory body is listed as the Financial Accounting Foundation (FAF). This is listed as a private sector organization to create standards for financial accounting. The fourth body is the Financial Accounting Standards Board (FASB). This body was created by our previous body, the FAF, and they set up standards for nongovernment financial accounting and reporting. Our fifth body to

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years exceeding five failures to which the corporation will attract fines, imprisonment, or both. Therefore, the regulations result in improved reporting of the financial data and unearthing of fraud in organizations. Other positives include ease of issue of registration, standard setting, inspection and enforcement as provided for by the creation of the Public Company Accounting Oversight Board (PCAOB) (Mullerat & Brennan, 2011).
The negative

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passed a rigorous examination. Most CPAs offer auditing, tax, and management
consulting services to the general public.
(g) FASB. Financial Accounting Standards Board. The primary body which currently establishes and
improves financial accounting and reporting standards for the guidance of issuers, auditors, users,
and others.
(h) SEC. Securities and Exchange Commission. An independent regulatory agency of the United
States government

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that they were not doing anything illegal by Mr. Sullivan. To be honest, the error of recording operating expense to capital expense is one of the most visible ones in accounting and might be regarded as a stupid error. However, such a big external auditing firm as Arthur Anderson could not uncover this fundamental fraud. For that reason, it took three auditors from the internal audit department headed by Cynthia Cooper to uncover the fraud

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registered public accounting firm. Their accompany report is based upon an audit conducted in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Home Depot has also established an audit committee of the Board of Directors which consist of independent directors, internal auditors and management representatives that meets with independent public accounting firm (KPMG, LLP) five times a year to discuss

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OUR LADY OF FATIMA UNIVERSITY- ANTIPOLO CAMPUS
RECENT ACCOUNTING SCANDAL:
“The HealthSouth Scandal of 2003”
SERRAON, ABIGAIL E.
Accountancy 4Y2-1
ENGR. ANTHONIO CHAN
March, 2016
INTRODUCTION
Embezzlement, misappropriation, cheating or stealing is a form of fraudulent act done with an organization. There are television and newspaper stories nearly every day about all kinds of corporate schemes and scams. Behind every fraud is a

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